Key Takeaways
- • Volcker Rule Compliance Driving Exodus: Jason Feasey (head of structured credit prop trading for EMEA at BofA Merrill Lynch) and Jenna Collins (prop trader in asset-backed securities) have joined London-based Brevan Howard Management, continuing a wave of bank prop traders migrating to hedge funds following regulatory pressure to comply with the Volcker Rule.
- • Coordinated Exit from BofA: Both traders departed Bank of America Merrill Lynch in Q4 2010 as part of the bank's initiative to cut between 20 and 30 prop trading positions to meet Volcker Rule requirements, demonstrating systematic talent redeployment rather than isolated departures.
- • Experienced Talent Pool: Feasey brings 16 years of prop trading experience beginning at D.E. Shaw and holds a Cambridge degree, while Collins previously served as senior portfolio manager at Cairn Capital and held lead analyst positions in Merrill Lynch's European Structured Credit Research team, reflecting the caliber of operators relocating to hedge funds.
- • Industry-Wide Pattern Accelerating: The migration extends beyond individual firms; First New York Securities, launched by former Jefferies CFO Joseph Schenk, established its first hedge fund populated heavily with ex-bank prop traders, with Schenk citing the Volcker Rule as the primary driver of the exodus.
- • Regulatory Circumvention Emerging: Goldman Sachs has reportedly begun rebranding proprietary trading operations as "client trading" to sidestep Volcker Rule restrictions, signaling institutional pushback against regulatory constraints.
Summary
The regulatory-driven exodus of proprietary traders from major banks to hedge funds accelerated in early 2011, with two veteran Bank of America Merrill Lynch traders, Jason Feasey and Jenna Collins, joining London-based Brevan Howard Management. Both departed BofA in the fourth quarter of 2010 as the bank moved to eliminate between 20 and 30 prop trading positions to comply with the newly enacted Volcker Rule.
Feasey served as head of structured credit prop trading for EMEA at BofA Merrill Lynch and brings 16 years of proprietary trading experience, having begun his career at D.E. Shaw. Collins, a prop trader specializing in asset-backed securities, previously held the position of senior portfolio manager at Cairn Capital and worked as a lead analyst in Merrill Lynch's European Structured Credit Research team. The two had been former colleagues at Cairn Capital before joining BofA, and their simultaneous departure reflects the coordinated nature of bank downsizing initiatives tied to regulatory reform.
This migration represents part of a broader industry pattern occurring "seemingly weekly," according to the coverage, as financial institutions shed proprietary trading operations mandated by the Volcker Rule. Joseph Schenk, former CFO of Jefferies, validated this trend when launching First New York Securities' inaugural hedge fund, which assembled a substantial cohort of former bank prop traders, including four from Merrill Lynch. Schenk explicitly attributed the influx to Volcker Rule compliance: "We are getting a big influx of traders coming out of banks, primarily because of the Volcker Rule."
The regulatory environment has prompted creative industry responses beyond simple talent migration. Goldman Sachs has reportedly begun circumventing Volcker Rule restrictions by rebranding proprietary trading divisions as "client trading," suggesting that banks are seeking operational workarounds rather than accepting full divestment of trading operations. The overall dynamic positions hedge funds as primary beneficiaries of regulatory compliance measures, effectively transferring experienced proprietary trading talent from regulated banking institutions to less constrained alternative investment vehicles.
Feasey served as head of structured credit prop trading for EMEA at BofA Merrill Lynch and brings 16 years of proprietary trading experience, having begun his career at D.E. Shaw. Collins, a prop trader specializing in asset-backed securities, previously held the position of senior portfolio manager at Cairn Capital and worked as a lead analyst in Merrill Lynch's European Structured Credit Research team. The two had been former colleagues at Cairn Capital before joining BofA, and their simultaneous departure reflects the coordinated nature of bank downsizing initiatives tied to regulatory reform.
This migration represents part of a broader industry pattern occurring "seemingly weekly," according to the coverage, as financial institutions shed proprietary trading operations mandated by the Volcker Rule. Joseph Schenk, former CFO of Jefferies, validated this trend when launching First New York Securities' inaugural hedge fund, which assembled a substantial cohort of former bank prop traders, including four from Merrill Lynch. Schenk explicitly attributed the influx to Volcker Rule compliance: "We are getting a big influx of traders coming out of banks, primarily because of the Volcker Rule."
The regulatory environment has prompted creative industry responses beyond simple talent migration. Goldman Sachs has reportedly begun circumventing Volcker Rule restrictions by rebranding proprietary trading divisions as "client trading," suggesting that banks are seeking operational workarounds rather than accepting full divestment of trading operations. The overall dynamic positions hedge funds as primary beneficiaries of regulatory compliance measures, effectively transferring experienced proprietary trading talent from regulated banking institutions to less constrained alternative investment vehicles.
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